Market outlook: People Logistics is key in chemical industry safety

07 August 2014 09:49  [Source: ICB]

Ensuring employee safety in the chemicals industry from home to the work site requires People Logistics and in-field safety management

The safety of employees has always been a top priority across the chemicals, oil and gas, and mining industries. However, a number of recent incidents have sharpened the attention of the industry on the safety of employees working for companies across these sectors as large numbers of permanent and contractor staff travel to and from the work site and conduct high risk operational roles in the field.

The oil and gas (O&G) sector appears to be most exposed, with ongoing volatility in the Middle East and the recent terrorist incident on the facility in El Amenas, north Africa, as well as more frequent natural disasters, such as the Queensland floods, which left many remote workers unaccounted for over a number of days.

The mining sector too has been exposed to a number of incidents, including the Copiapo mine collapse in Chile, which left 30 miners trapped 700 metres underground for 69 days in 2010, or the more recent explosion in a Turkish coal mine, which killed more than 300 people.

Traditionally, the chemicals sector has been less exposed to some of the remote and high risk locations in which the oil and gas, and mining companies operate in. However, as they increasingly look to invest in large capital projects in emerging markets, such as the recent investment by Dow Chemical in Saudi Arabia, they face similar challenges providing safe transportation, accommodation and in-field safety of their employees.

Further, the chemicals industry has suffered a number of recent high profile incidents, such as the chemicals plant explosion at the West Fertilizer plant in Texas, US, which killed 15 and injured 160.

As such, focus on the safe, efficient and effective transfer of workers from their home location to and from the work site is gaining increased attention, with a number of the leading operators recognising the importance of what we call “People Logistics”.

PEOPLE LOGISTICS EXPOSURE
This flow of permanent staff and contractors using commercial and non-commercial transport often straddles multiple departments, including human resources; corporate travel; health, safety and environment (HSE) and logistics and, when considered end to end, also includes in-field safety managed by the operations and HSE teams. This can make it difficult to effectively coordinate a response in the event of an incident and can often results in high costs. Supply chain and logistics costs represent 10% of the total turnover of the chemicals industry, with People Logistics typically representing 30-40% of the total logistics costs for capital projects.

HSE ranks as one of the most important factors for the chemicals industry, particularly across capital projects, such as plant facility construction and maintenance. Looking ahead, we see three key challenges for the sector in being able to effectively manage its People Logistics and in-field safety to minimise HSE exposure and reduce associated costs:

1. Maximising in-field safety through control of movements into the field and maintaining communication with remote workers.

Lean operations, an ageing workforce and the use of technology are increasing the ­demand for specialist, contractor workforces.

That leaves an increased level of safety ­exposure for workers, often required to conduct maintenance activities alone at remote work sites.

Maintaining duty of care in high exposure environments requires control of the flow of operatives to the field and maintaining communication with them and visibility of their safety. In the event of an incident, knowing where workers are and the conditions they have been exposed to is critical in coordinating an effective response.

2. Moving large volumes of contractors and staff into emerging markets.

The Sadara (a joint venture between Dow Chemical and Saudi Aramco) chemical plant construction project in Al-Jubail, Saudi Arabia has already recruited 7,600 employees.

The workforce of a large capital project ­typically consists of local commuters and expats, made up of contractors and permanent staff. Ensuring employees are approved to move into the field with the correct visas, training and certification is critical to maintaining HSE control.

The logistics function can act as a control point to ensure compliance, prior to the worker travelling to the site in order to avoid unnecessary cost and safety exposure.

Maintaining a single view of the employee’s location across multiple work sites, travel routes and accommodations is critical to effective management of personnel safety in the event of an incident.

Further, visibility of the contractor movements in particular can result in cost reduction, ensuring contractor time is maximised by providing “right kit, right time, right people, right place”, which also minimises the risk of project delay.

Experience from the oil and gas sector has shown that maintaining control of the movement of these large transient workforces is critical to effective cost and HSE management.

3. Minimizing exposure to road transport.

In the chemicals sector, between 2009 and 2010, fatalities increased by 3.5%, with 71% occurring on road transport.

One chemicals client has suffered four road transport fatalities in one of its emerging market capital projects in the last year alone.

This exposure is not limited to emerging market locations, with Canada’s industrial highway 63 in Alberta proving a global hotspot in road transport exposure with 66 fatalities and thousands of collisions between 2002 and 2010.

With exposure across people movements (buses, light vehicle fleets, taxis and personal commuting) as well as materials movements on heavy goods vehicles, many companies in the industrial sectors are now looking at more effective journey management to oversee the key facets of effective journey management: pre-trip planning, journey execution monitoring and post-trip close out to reduce HSE exposure as well as costs.

The oil and gas, and mining sectors have identified a number of focus areas to help combat the challenges highlighted above. These can be adapted and applied to the chemicals sector.

ADOPTION OF DIGITAL TECHNOLOGY
Marathon Oil at its Robinson refinery in Illinois, US has deployed sensors, such as in-field devices, to help track worker exposure to dangerous gases, detect worker movement to ensure that they are safe and to provide panic buttons to maintain communication with lone workers.

By generating real-time information, these devices, part of Accenture’s life safety solution (ALSS), improve safety by reducing response time to incidents, most relevant to industries with large-scale high risk processing plants.

Similarly, in-vehicle telematics have been deployed successfully across a number of sectors to generate valuable safety data from road transport fleets such as vehicle location, seat belt usage and harsh braking, which is being used to help maximise safety and reduce costs.

Further, mobile apps are being deployed to employees and contractor staff to help them manage authorisations and approvals to ­travel, access mandatory training prior to ­travel and to track their movements to and from the field.

The targeted use of social media can bring benefit to People Logistics management.

Some early adopters are looking at social media groups to share information between drivers, (for example, on road closures or inclement weather), that allows for better journey management and re-routing if necessary.

USE OF ANALYTICS
The deployment of digital technology and sensor devices is creating large volumes of near real-time operational data relating to People Logistics and in-field safety.

For example, in-vehicle telematics can highlight regular offenders of seat belt and speeding violations, while data generated by the travel mobile apps can highlight those who create avoidable cost by changing and cancelling bookings at the last minute.

For in-field safety, large volumes of worker location information can be analysed to ­highlight the highest levels of risk exposure across global operations and in-vehicle telematics can also show which stretches of road cause regular harsh braking patterns and should be avoided.

In seeking improved People Logistics and in-field safety management, some companies are creating dedicated teams to work across departmental boundaries.

The Accenture Life Safety Solution that was deployed at Marathon Oil was supported by a monitoring team designed to track worker safety 24/7 and help coordinate the response in the event of an incident.

Road transport operations are also being monitored and controlled by specialist journey management teams, designed to provide effective pre-trip planning, incident monitoring and post-trip close out and management to intense road transport operations.

Alongside HSE and cost benefits, effective People Logistics and in-field safety management can also improve employee satisfaction, helping to attract and retain the best talent by providing safe and reliable movement to and from the work site.

As new HSE challenges arise and cost ­efficiency remains a source of competitive advantage, the chemicals industry can learn from the oil and gas, and mining sectors to help step change People Logistics and in-field safety management.

Zak Cook is the chemical and natural resources managing director at Accenture, responsible for business transformation across consulting, ­technology and operations. Contact ­zakary.cook@accenture.com

John Calder is a senior manager in Accenture’s Supply Chain practice and specialises in network strategy and transformation programmes, with experience in warehousing and transportation. Contact john.calder@accenture.com


Author: Zak Cook and John Calder



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